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<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Saturday, July 11, 2009 5 things General Motors must do to recover The company is out of bankruptcy, but it still faces many tough challengers. Associated Press DETROIT -- Even after emerging from bankruptcy protection Friday, the new General Motors still faces some of the same troubles that haunted the old one, which piled up more than $80 billion in losses during the past four years and still needs government aid to survive. So how does a company that has not made money since 2004 get back to turning a profit? The top five things GM needs to do to be successful: 1. Win back customers from Toyota and other competitors by making cars that are more reliable than rival brands. Why it's important: GM has the image of building shoddy cars, mainly because that's what it did in the 1970s, '80s and even '90s. GM neglected its cars in favor of higher-profit trucks and SUVs until five years ago, and the stigma remains. GM is succeeding if: Vehicles introduced in the next 18 months have above-average reliability, said David Champion, director of automotive testing for Consumer Reports magazine. The forthcoming Chevrolet Cruze compact, for example, must not only be stylish, but perform over time. 2. Raise gas mileage on every vehicle and bring out electric cars. Why it's important: Experts agree that gas prices will stay volatile. Supply is limited, and when the world economy recovers, demand will rise. That means a possible return to $4-a-gallon gasoline. GM is succeeding if: Every new model (GM plans to roll out 10 in the U.S. and 17 in other countries in the next 17 months) has dramatically better gas mileage in government testing than its predecessor. 3. Draw younger buyers into showrooms. Why it's important: Impressing buyers when they're young makes it more likely that they will stick with the same brand in the future. Yet GM's customers are typically older, said John Wolconowicz, auto analyst at IHS-Global Insight. The brands with the most appeal among younger buyers are Volkswagen, Mitsuishi and Honda, he said. GM is succeeding if: GM products are appearing in hit movies, music videos, TV shows and other media. "If GM is smart, they'll get that car out in all the right places with all the right people," said Karl Brauer, editor in chief of the automotive Web site Edmunds.com. 4. Cut GM's bureaucracy so it can make quick decisions in response to market shifts Why it's important: Even top GM executives concede that for years the company's multiple committees and stodgy divisions slowed decisions and watered down car and truck designs. Now, with swinging gas prices, economic uncertainty and demographic changes, automakers have to change models quickly. GM is succeeding if: Its new models have cutting-edge designs that sell well, and its quality rankings and fuel economy rise. 5. Do a better job anticipating changes in consumer tastes. Why it's important: If an automaker has vehicles on its dealer lots that no one wants, it is forced to lower prices to move them. GM is succeeding if: It can adjust when the market shifts because of gas prices or social trends. READER COMMENTS Be the first to comment. You must be a registered user and verify your e-mail address to post comments to blogs or articles on HeraldNet. To register, click here. To read other terms and conditions, click here. Log out

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